Management and non-management perception of risk culture in a South African retail bank

Abstract

Much has been written on risk culture within the financial sector, and the material includes requirements and guidelines set by regulatory bodies. However, there appears to be a scarcity of published literature specifically demonstrating the assessment of risk culture maturity levels across management and non-management personnel within retail banking. Uncertainty about whether management and non-management staff, in both risk and business functions, share similar risk perceptions had led to a South African retail bank’s interest in assessing its risk culture maturity. Financial regulatory and best practice requirements emphasise the fact that the responsibility for promoting sound risk culture rests with the board and senior management. A “tone-at-the-top” that is “in-tune-with-the-middle” facilitates a common understanding of risk between management and non-management staff, which is essential for promoting a mature risk culture. The North-West University UARM Risk Culture Survey (UARM RCS-2018) was distributed to approximately 350 employees to gain insights into staff perceptions of the organisation’s risk culture. A statistical analysis of the responses confirmed a high risk culture maturity level among the sample population with 72% perceiving risk to be highly integrated in decision making. In terms of one’s own management of risk, management employees perceived a greater level of comfort than did non-management employees. While management acknowledged accountability for embedding risk culture, the main area cited for improvement was the overall tone from the top (i.e. leadership). This survey-based approach to assessing risk perceptions of a retail bank’s personnel, with the use of UARM RCS-2018, yielded valuable insights that illustrate its potential usefulness for other financial institutions and for scholars investigating risk culture.